Central Government's Capital Spending Sees Rise Despite Opposition Queries
Finance Minister Nirmala Sitharaman, addressing queries during Question Hour in the Rajya Sabha on Tuesday, clarified that the Centre's capital expenditure has increased to ₹11.21 lakh crore for the fiscal year 2025-26, contradicting claims of expenditure cuts.
Responding directly to senior Congress leader and former finance minister P Chidambaram, Sitharaman highlighted the increase from ₹11.11 lakh crore in fiscal 2024-25 to ₹11.21 lakh crore in the current budget.
Increased Loans to States Under Special Assistance Scheme
Sitharaman also noted a proportional increase in loans provided to states under the special scheme of interest-free, 50-year loans aimed at enhancing states' capital expenditure. She emphasized that reductions in capital spending are not applicable to the current government’s financial strategy.
Chidambaram had questioned the finance minister about the revised budget estimates for FY25, highlighting the apparent reduction in capital expenditure from ₹11.11 lakh crore to ₹10,18,429 crore, alongside a reduction in special assistance to states from ₹3,90,778 crore to ₹2,99,891 crore.
Consistent Increase in State Loans Since Scheme Introduction
Providing detailed insights, Sitharaman revealed that since the launch of the scheme in 2020-21, the Centre consistently increased loan releases. Initially, ₹9,912 crore was approved, but ₹11,830 crore was released to states in the first year itself.
Following a similar pattern, in subsequent fiscal years:
- 2021-22: ₹15,928 crore approved, ₹14,186 crore released.
- 2022-23: ₹95,147 crore approved, ₹81,195 crore released.
- 2023-24: ₹1,27,492 crore approved, ₹1,00,954 crore released.
- 2024-25: ₹1,53,673 crore approved, with ₹1,46,362 crore already released by March 26.
Monitoring Mechanisms for State Expenditure
On being asked whether the Central government monitors if states utilize these funds specifically for capital expenditure, Sitharaman explained that immediate monitoring is not feasible. However, with the use of digital mechanisms and designated nodal accounts, tracking the utilization has gradually become possible.
She further mentioned that Tamil Nadu, for example, did not withdraw any funds initially in 2020-21. Later, however, the state received substantial assistance:
- 2021-22: ₹505.50 crore
- 2022-23: ₹4,011 crore
- 2023-24: ₹5,326.42 crore
- 2024-25 (up to March 26): ₹7,345 crore
Overall, Tamil Nadu has cumulatively received ₹17,189.05 crore but has abstained from two specific initiatives—scrapping old vehicles and urban planning reforms.
Sitharaman concluded by emphasizing that project completion certificates ultimately clarify whether the allocated funds were used correctly for capital expenditure.
